1confirmation: The native application of stablecoins is about to experience explosive rise.

Source: 1confirmation Newsletter; Compilation: AIMan@Golden Finance

MakerDAO, Basis, Bridge. Over the past decade, 1confirmation has supported several stablecoin projects, some of which have failed, some have seen modest success, and others have made groundbreaking progress. These all validate our long-held belief: stablecoins represent one of the first products in the cryptocurrency space that transcends speculation and truly fits the market.

Background is very important

1confirmation has been betting on stablecoins since day one. Not because they were hot at the time, but because they showed signs of real-world applications beyond pure speculation.

In 2017, 1confirmation invested in MakerDAO, a decentralized collateral-backed stablecoin that is still in operation today. In 2018, 1confirmation invested in Basis, an algorithmic stablecoin, but eventually collapsed and returned investors' funds. In 2022, 1confirmation invested in Bridge, which was acquired by Stripe for $1.1 billion, making it one of the largest crypto acquisitions to date.

One failed, one succeeded, and one made a breakthrough. They all validate a point that 1confirmation has insisted on for many years: stablecoins are one of the first practical use cases of cryptocurrency.

North Star

1confirmation believes that the total on-chain supply of stablecoins is key to driving crypto adoption. Today, the market size has reached $247 billion, surpassing the peak of $187 billion set in May 2022. Since the beginning of 2024, the market size has grown by 90%.

This North Star metric represents the true adoption of cryptocurrency and indicates whether we are gaining net new users.

Why Now

From a macro perspective, stablecoins have become a strategic necessity for the dominance of the US economy.

Dollar Export Issue: Foreign central banks' dollar reserves have decreased from 65% in 2015 to 57% today. The BRICS countries and recent tariff measures are accelerating the de-dollarization. Stablecoins distribute dollars directly to the global public via the internet, without the need for government support, thereby addressing this issue.

Treasury Buyer Solutions: Tether currently ranks among the top 20 U.S. Treasury buyers globally, surpassing Germany and Australia. As traditional buyers like Japan and China reduce their holdings, stablecoin issuers are becoming an important source of funding for the U.S. government operations.

Legislative Windfall: The upcoming stablecoin legislation (Genius Act) will allow major players like U.S. banks and Meta to launch their own stablecoins, significantly expanding the market.

Native Applications of Stablecoins

All this macro background is interesting, but how exactly should you make money? 1confirmation believes that we are about to see explosive growth in native applications of stablecoins, far exceeding expectations.

Consumer Applications: Polymarket has proven that native applications of stablecoins can achieve mainstream adoption, processing billions in transaction volume while delivering truth and information to the world. This is just the beginning.

Emerging markets: Cryptocurrencies have long promised financial inclusion for billions of unbanked people. However, all we get is speculation. Stablecoins have finally lived up to their original vision. We recently invested in Karsa, a stablecoin neobank for Pakistan and Nigeria. Inflation rates of up to 32% in both countries make the circulation of the dollar essential for financial stability. Karsa's original intention was not to make the rich richer, but to provide financial tools to those who needed it most.

Geographical Expansion: Currently, 99.9% of stablecoins are pegged to the US dollar, but this situation is expected to change. In the next five years, with the improvement of global regulatory frameworks, stablecoins pegged to the euro, pound sterling, and other fiat currencies are expected to grow significantly.

The Road Ahead

Stablecoins represent the clearest path for cryptocurrencies to move towards mainstream adoption. Unlike other speculation-driven crypto narratives, stablecoins genuinely solve real-world problems for people today.

The macroeconomic tailwinds are stronger than ever. The technology has been validated. Regulatory clarity is on the horizon.

We are looking for founders who understand that the biggest opportunity is to build native applications for stablecoins, bringing stablecoins to the next billion users.